Mauritania continues to face a challenging external environment with low and
volatile metal prices. A steep decline in iron ore prices in 2014-15 took away half of
exports, widened the fiscal deficit, put pressure on reserves, and exposed bank
vulnerabilities. In response, the authorities adjusted the budget significantly in 2016 (by
3 percent of GDP), allowed the exchange rate to depreciate, and mobilized foreign
grants and loans. These efforts were successful in reducing external imbalances and
maintaining macroeconomic stability, but growth slowed considerably, external debt
continued to rise (to 72 percent of GDP, with a high risk of debt distress), and financial
stability risks heightened. In parallel, the authorities are preparing a national strategy for
accelerated and inclusive growth covering 2016-30, including structural reforms and
large foreign-financed infrastructure investments to support growth and diversification.